Speech on Trade and Investment

Posted in Africa, Speeches on Jun 15, 2015

My Lords, I begin by welcoming my noble friend Lord Maude to your Lordships’ House and congratulate him on his appointment as Minister of State for Trade and Investment and on the excellence of his maiden speech. He did great work in the other place, and I am sure that he will continue to play a key role in his new capacity. I am glad to have the opportunity to speak on the subjects being discussed here today. Trade and investment is an area in which I take great interest. I have stated several times in your Lordships’ House that I am very keen to promote more business between the United Kingdom and overseas countries. I believe that this will be one of the driving forces of our continued recovery. Ultimately, it will help us to balance our budget and reduce our national debt. I would like to focus on the importance of the United Kingdom building its bilateral trade with the African continent. I have a personal affinity with Africa, as I was born in Kenya and spent my formative years in Uganda. I have travelled across the continent, spoken at various meetings and met African businessmen. I have first-hand knowledge of what Africa has to offer. The continent's GDP is expected to grow by 4.5% this year and 5% next year. Furthermore, many African states have been members of the much-admired “7% club” in recent years. A number of economists have predicted that Africa could account for 7% of the global economy by 2040. Africa has a huge land area and an abundance of untapped natural resources. These include substantial reserves of oil, minerals, food and natural resources, and will undoubtedly serve much of the world’s demands in the future. Africa offers so much but, like any other economy, it has its challenges and vulnerabilities. Africa has realised these challenges and is already working hard to address them. At the moment a conference is being held in South Africa where one of the subjects being discussed is the growth of the continent’s economy and achieving prosperity. Last week I hosted and spoke at an event for the Economic Community of West African States, a body of 15 west African countries with a vision of collective self-sufficiency for their member states. They are creating an integrated region with mutual access to resources and investment opportunities. A few days ago I met African businessmen who are very keen to promote trade between the UK and Ghana. It is worth while our accelerating our trade with Ghana, as it is a stable country with good governance. Similarly, last year I was asked to speak at an event for the Southern African Development Community. It is a great example of fluid multilateral co-operation to encourage economic growth. It is investing in projects aimed at improving infrastructure in the region. At a recent dinner held by the Association for African Owned Enterprises, I was awarded the lifetime achievement award for my involvement in trade with Africa. African countries are also moving quickly to improve their investment climate and conditions for doing business. Last year a World Bank report found that Africa comprises five of the top 10 places in the world with the most reforms making it easier to do business. The same report found that since 2005, all African countries have improved the business regulatory environment for small and medium-sized businesses. Foreign direct investment is gradually moving away from mineral resources into consumer goods and services. This is in response to the needs of a growing middle class. Manufactured goods now constitute nearly 40% of intra- African exports. These changes present an unprecedented opportunity for overseas businesses to get involved. We must capitalise now before it is too late. The UK’s current engagement with Africa is based too heavily on aid and long-established commodity-based businesses. We need to see new British companies entering the African market. We must seek to help the continent to grow rather than simply supporting it with aid contributions. This in turn will help us to grow further here at home. Does the Minister agree that trade and aid must go hand in hand? I would appreciate his comments. We already have a natural advantage with the significant African diaspora settled in the UK. Businesses should look to engage with these people in seeking to connect with Africa for the first time. There is of course a young and hungry new workforce in Africa, ready for foreign investors to utilise. Indeed, it is estimated that Africa’s share of the global workforce will increase from 12% to 23% by 2050. The United Kingdom must do more to help unlock this potential. As someone who has a business as well as an academic background, I would like to see more partnerships between British and African universities. We must help to build practical vocational programmes and increase access to secondary and further education. Young Africans need to develop new skills in order to properly navigate what is a rapidly changing career landscape for them. Does my noble friend feel the same as I do about the education and training of Africans? I am a fervent supporter of trade through our Commonwealth. It is in Britain’s economic interests to utilise what is essentially a ready-made trading bloc that covers a third of the world’s population. Many African countries are part of the Commonwealth, including Ghana, Kenya, South Africa, Uganda, and Africa’s largest economy, Nigeria. On that note, I am pleased to note the Government’s recent enthusiasm for working with the new Commonwealth Enterprise and Investment Council. I would be grateful if my noble friend updated your Lordships’ House on how the Government are supporting and engaging with that council. I also commend the economic partnership agreements brokered between Europe and the African regions in recent years. However, the United Kingdom must do more in its own right. We must surge ahead of the rest of Europe, and indeed the rest of the world. It is also crucial that the relevant people and bodies work together in order to maximise our trade efforts. We must pool our talents as much as possible. The expertise from the Foreign Office, the Department for International Development, UK Trade & Investment and the private sector must all be combined and work in tandem to accelerate the trade activities. Is my noble friend satisfied that there is adequate co-ordination between the parties I have referred to? Our high commissions and embassies in African countries can take an active role in notifying relevant companies in the UK of the opportunities and tenders available for bidding in the countries where they serve. We should also arrange trade exhibitions and visits of delegations to suitable African countries. Can the Minister say whether the Government recognise the importance of such delegations, and will he undertake to ensure that we see more of these visits to the African continent in the future? The embassies and high commissions of African countries should prepare details of the opportunities available in their countries and provide them to interested parties in the UK. They could also prepare periodic press releases with the information. The embassies and high commissions of African countries, together with private organisations that are trying to facilitate strengthening of trade links, can arrange for trade exhibitions and delegations, which can meet relevant government departments and interested companies. Africa is made up of 54 countries and each does business in a slightly different way. Local knowledge will help us shape investment models that present African ventures to reflect their true commercial value. The UK will be left behind if we do not address our international trade engagement strategies with Africa. For future growth, and to see new UK companies enter the African markets, we need to look at individual sectors and have more of a business approach to engagement with Africa. Particular areas that UK companies can look at are construction, infrastructure, manufacturing, minerals, IT, agriculture, the financial services sector and export of goods from the UK. We must act now and connect our businesses at home with the overseas markets of the future. From more overseas trade will come growth, and from growth will come prosperity and stability. We have unique services and products which we can offer to Africa. No other continent offers such a unique mix of opportunities and challenges. Indeed, I believe that the opportunities far outweigh the challenges.

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    Lord Sheikh is a Conservative Peer, businessman, academic and philanthropist. This is his website.

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